Canadian Housing Crisis: Rethinking Building for Immigration
While Canada’s housing crisis has received considerable attention, we often overlook how homes are actually built. As we debate issues like affordability, interest rates, and immigration, the real challenge lies in our construction methods, which haven’t kept pace with urgent demands.
A recent report from the C.D. Howe Institute highlights that Canada isn’t just facing a housing shortage due to low production levels; it reveals a deeper misalignment between our ambitions for rapid, affordable housing and the outdated, fragmented construction practices we still use.
The housing sector is not lacking in skill or technology. The challenge is a construction model that has barely changed over time, even as demands have skyrocketed.
Challenges Before Construction Begins
Before delving into issues like labour shortages, it’s important to highlight the bureaucratic obstacles we face. It can take nearly 250 days to secure a general construction permit in Canada, putting us near the bottom of the OECD ranking—only Slovakia is slower. This extensive wait time translates into a significant setback, especially for a country that desperately needs affordable housing solutions.
Until we streamline the permitting process, any discussion about increasing supply feels like running a marathon in concrete boots. By adopting more standardized construction methods, we could not only speed up approvals but also ensure that builders are incentivized to deliver projects on time.
Like any other sector, the construction industry seeks profit. If builders can reduce their costs, they’re likely to pass those savings on to consumers, making it easier to sell or rent units. For instance, if a builder saves $50,000 on a specific input, it’s reasonable to expect they’ll adjust their prices to attract buyers.
The Gap in Housing Supply
To restore affordability to 2019 levels, Canada needs to build between 430,000 and 480,000 new homes annually. Yet in 2023, we constructed just over half of that target. With a rapidly growing population, particularly in urban centres, this gap is even more pronounced.
The numbers show a critical mismatch: there simply aren’t enough homes to keep pace with population growth. This shortfall calls for urgent action, especially in communities experiencing severe housing shortages.
Labour Shortages Worsen the Crisis
Hiring more workers should ideally lead to increased construction output, but recent data indicate a decline in productivity. Despite a 26% increase in the residential construction workforce between 2020 and 2023, the number of homes completed per hour worked has decreased.
Preparing for the Future
Canada’s construction workforce faces a demographic challenge, with about 245,000 skilled workers expected to retire by 2032. That translates to a substantial need for new hires. Without modernizing our construction processes, we might still struggle to fill these gaps.
- Capacity issues: Even with improved permit processing, lack of crews could delay projects.
- Loss of skills: The retirement of experienced workers means we lose valuable on-site knowledge.
- Cost pressures: Shortages naturally drive up wages, which can complicate overall budgeting.
None of these challenges are trivial. The sector remains heavily reliant on traditional building methods, making it susceptible to setbacks from weather, scheduling issues, and rising costs.
An Opportunity for Innovation
Other countries have managed to address their housing needs with innovative approaches. For instance, Sweden constructs most of its homes off-site using factory-assembled components. However, Canada continues to lag behind, as evidenced by the closure of Z Modular’s facility due to excessive regulations and delayed financing.
To truly tackle our housing crisis, we need more than just investment; we require systemic reform. It’s essential to expedite the permitting process and create financing models that accommodate innovative building methods, including off-site constructions.
Renewed Focus on Modular Housing
Modern modular construction—where homes are built in sections and assembled on-site—offers a potential solution. Modular building can halve construction time and significantly reduce costs when implemented systematically.
Unfortunately, regulatory frameworks often fail to recognize the advantages of these innovative approaches, thus stymying their widespread adoption.
Essential Reforms for Addressing the Crisis
While public investment is a start, solving our housing challenges requires deep structural reforms. Shortening permitting timelines, modernizing financing, and providing specific criteria for prefabricated systems are essential steps.
Moreover, we need real-time productivity benchmarks to drive home the effectiveness of varied building methods. Without clear data, policymakers may continue to rely on outdated assumptions.
The Path Forward
Canada cannot achieve affordable housing levels without reforming its construction sector. As we add nearly half a million people annually, we must adapt our systems to meet these challenges head-on.
Let’s prioritise modernisation in construction to ensure we’re not just talking about solutions, but actively implementing them. Because the need for affordable homes is pressing, and we can no longer afford to wait.
